Friday, 5 July 2013

Further steps to cool Singapore property market

Singapore home prices climbed to a
record in the second quarter as gains in suburban housing values
accelerated, leading to new government measures on property
loans at the end of last week.

The island state’s private residential property price index
rose 0.8 percent to 214.9 points in the three months ended June
30, extending a 0.6 percent increase in the first quarter,
according to preliminary estimates released by the Urban
Redevelopment Authority today. The pace of gain in suburban home
prices more than doubled from the previous three months.Record home prices amid low interest rates raised concerns
of a housing bubble and prompted the government to widen a four-year campaign in January to curb speculation prices in Asia’s
second-most expensive housing market. Singapore on June 28
unveiled new rules governing how financial institutions grant
property loans to individuals, extending efforts to curb
excessive price increases.read more

HDB flat in Bishan sold for record $1.05mA HDB executive maisonette in Bishan Street 13 was sold for a record S$1.05 million in December with cash-over-valuation of S$250,000, according to market data.Located on the 20th floor of Block 190, the 150 sq m (approx. 1,615 sq ft) flat was listed on real estate portalPropertyGuru for about one month and attracted keen interest from three other buyers willing to pay over S$1.05 million, said DWG agent Thomas Hee who closed the deal.But in the end it was sold to a young couple very familiar with the market.read moreKhaw urges calm after S$1m flat price

Singaporeans should not be upset over reports that a resale flat was sold for S$1 million, said National Development Minister Khaw Boon Wan during a recent dialogue session with grassroots leaders in Sembawang, reported The Straits Times.Mr Khaw explained that there will always be premium units offering fantastic views that will command very high prices, just like the case of the executive maisonette in Queenstown.The sale of that unit is still on-going and is expected to hit S$1 million, with a cash-over-valuation (COV) of S$195,000.read more

Singapore home prices up again, suburbs seen most vulnerable to correctionSingapore home
prices rose for a fifth straight quarter in the three months to June,
and analysts said owners and developers of private apartments in the
outer suburbs appear most at risk should the property market correct.Singapore's central bank on
Friday introduced rules to cap a property buyer's monthly payments at 60
percent of income in a bid to stabilize the housing market and to ensure those buying homes would not be caught out by a rise in interest rates.Based
on flash estimates released by the Urban Redevelopment Authority (URA)
on Monday, prices of apartments in Singapore's core central region,
which includes the posh Orchard Road district popular with foreign
investors, have risen by 49 percent since the end of the global
financial crisis in 2009.read moreSingapore Tightens Home-Loan Rules Amid Record Property PricesSingapore unveiled new rules
governing how financial institutions grant property loans to
individuals, extending efforts to curb speculation as prices in
Asia’s second-most expensive housing market continue to rise.Starting today, a new framework requires that lenders take
a borrower’s debt into consideration when granting property
loans, the Monetary Authority of Singapore said in a statement
yesterday. Home loans should not exceed a total debt servicing
ratio of 60 percent and those that do will be considered
“imprudent,” it said.In January, the government unveiled a seventh round of
measures in about four years that included an increase in stamp
duties for home buyers by 5 percentage points to 7 percentage
points. While private residential property prices rose to a
record in the three months through March, the gain was the
slowest in three quarters after the government’s January curbs read more

Property craze propels S'pore debt level

As a result of
Singapore's love affair with property, debt levels have soared to 75
percent of its GDP from just 38 percent in 2000. This level is high
compared to other countries in the region, according to a Standard
Chartered report.

The study which covered 12 Asian countries revealed that only Korea,
Malaysia and Australia have higher debt levels than Singapore.The surge in household debt is attributed to high property prices as
housing loans account for 74 percent of all consumers loans. In fact,
mortgage growth in Singapore increased at a double-digit pace since 2000
and this has shot up further in the last six years read more

Singapore property shares fall after cooling measuresShares of Singapore's
blue-chip property firms fell as much as 2.3 percent on Monday
as investors reacted to new measures aimed at cooling the
city-state's housing market.Shares in Southeast Asia's biggest real estate company
Capitaland Ltd fell 2.3 percent while City
Developments Ltd dropped 1.2 percent, figuring among
the biggest losers in the market in early trade. The benchmark
index market was down 0.2 percent.Singapore on Friday introduced rules to ensure that a
property buyer's monthly payments do not exceed 60 percent of
his income, reining in highly leveraged investors who might be
caught out by an expected rise in interest rates over the coming
months.read more

New Shadow Cooling Measures from MAS – the Leverage Killer?It’s been less than six months since the Seventh Round of Property Cooling Measures and around four months since the hike in high-end property tax rates in Budget 2013, but the property market has not cooled.
Developer sales, in particular, are still going strong while the resale
market has been steadily recovering since March based on transaction
volumes. Prices also stubbornly refuse to come down – the just-released
URA flash 2nd Quarter 2013 quarter-on-quarter increase of 0.8% is an acceleration of 0.6% compared to the previous quarter.So while it’s not officially a cooling measure, the introduction by the Monetary Authority of Singapore (MAS) of the Total Debt Servicing Ratio (TSDR) framework
signals the Government’s continual concern about the exuberant state of
the property market and its incremental (though so far mostly
unsuccessful) efforts to cool it down.Effective 29 June 2013, the TSDR covers all property loans granted by
financial institutions (FIs) to individuals (including sole
proprietorships) and will require FIs to take into account all of the
borrowers’ other loans when granting property loans. The TSDR will
comprehensively cover all types of property loans, including those used
to purchase property, those secured by property, and the re-financing of
these loans (with some exceptions).read more

Will new measures on property loan cool the property market?Over the weekend, the government rolled out new measures to curb
excessive borrowings by property investors. The new ruling requires
lenders to take into consideration of the debtor's other existing loans
when granting property loans. The aim is to strengthen credit practices
by financial institutes and encourage financial prudence among
borrowers. The central bank will also refine rules related to the
application of the existing Loan-to-Value (LTV) limits on housing loans.
These refinements seek to ensure the effectiveness of the LTV limits
that were put in place to cool investment demand in the housing market.
In particular, they aim to prevent circumvention of the tighter LTV
limits on second and subsequent housing loans.The question at the back of investors' mind will be whether the new
measure will be the ultimate needle to burst the housing bubble. My take
is that this new measure will not have any significant effect on the
housing market. To put things into perspective, the current housing
situation is not truly due to demand and supply dynamics. The private
home market has witnessed huge gains in prices in recent years because
of the hot money flowing from foreign countries such as United States
and China as a result of loose monetary expansion.Cash rich investors
poured in funds to pump up prices of local private homes. Therefore no
matter what policies that are going to be or have been implemented by
government, they will have limited effectiveness to cool the market
because the rich will not be hurted. Only the middle-income buyers will
be curbed by the slew of measuresread more

Who the New Total Debt Servicing Ratio Will KillThe Monetary Authority of
Singapore (MAS) introduced the Total Debt Servicing Ratio (TDSR)
framework for all property loans granted by financial institutions
(FIs), with effect from 29 June 2013

Computations of the TDSR affects properties that are residential or
non-residential, owned individuals or companies, new applications or
re-financed loans, and in or outside Singapore. Declaration and
calculation of incomes and loans are also now very detailed.TDSR may be a new term, with explanations in the FAQs of the TDSR
unnecessarily long and difficult to read, but they are only additional
sub-clauses to address the loopholes of the Loan-to-Value (LTV) limits
announced in the previous property cooling measures.read more

MAS Has Another Go at Property Cooling MeasuresThe latest financial measure to hit the Singapore property market
comes from Monetary Authority of Singapore (MAS), the same body that
targeted car loans just a few months ago. This time, they are targeting
housing loans with a range of refinements and definitions to level the
playing field for both banks and buyers.The refinements to the application of LTV limits will prevent people
from using family members to make property purchases and to apply for
loans on their behalf, as pointed out by several other news sources.
This loophole allowed individuals to effectively have two housing loans,
or more, without incurring Additional Buyers Stamp Duty.But something else in that announcement caught our eye as well, within
latest slew of measures described as a “TDSR framework”. It seeks to
better outline the requirements and methods to compute and evaluate TDSR
for property loans, and in doing so introduces a new 3.5% interest rate
provision. We believe this number could drastically affect the
house-buying plans of many. But first, some background on TDSR.read moreSingapore takes further steps to cool property marketSingapore's central bank on
Friday introduced rules to ensure that a property buyer's
monthly payments do not exceed 60 percent of his income, a move
aimed at cooling the housing market and ensuring investors are
not caught out by a rise in interest rates."The TDSR (total debt servicing ratio) will apply to loans
for the purchase of all types of property, loans secured on
property, and the re-financing of all such loans," the Monetary
Authority of Singapore (MAS) said in a statement.The new requirement, which takes effect on Saturday, will
also help strengthen credit underwriting practices by banks and
encourage financial prudence among borrowers, MAS addedread more

Punggol EC oversubscribed 1.2 timesThe newly-launched Ecopolitan executive condominium (EC) in Punggol has
been 1.2 times oversubscribed, with 650 e-applications received since
Friday, 5 June.Developed by Qingjian Realty (South Pacific)
Group, the project comprises 512 units spread across eight blocks. Units
range from three- to five-bedroom configurations.Ecopolitan
also features a “CoSpace” concept which offers the flexibility to
combine both utility and study rooms into a wider, more useful space
that can be used for various purposes

Amid another round of cooling measures, Singaporean developers are
luring buyers with discounts on their completed penthouse units.
Savills Singapore reported that City Developments Limited has offered
five percent discount on some of its completed penthouses including
units at Shelford Suites, a 77 unit exclusive freehold condominium
development on Shelford Road; Wilkie Studio, a contemporary freehold
development in the popular District 9; and The Glyndebourne, a 150
unit freehold condominium development on Trevose Crescent. Prices
start at S$2.9 million (US$2.3 million) after discount.

Meanwhile, Hiap Hoe is offering 28 percent discount for four
penthouses at Skyline 360, translating to S$9 million to S$12.3
million (US$7.1 million to US$9.7 million). The freehold condominium
project is conveniently located close to Somerset MRT station and the
Orchard shopping belt. The units are serviced by private lifts and
fitted with high quality materials including marble and timber
floors, and full height, sliding window and door panels. The development offer expansive views over Orchard Road and Marina Bay

25 percent discount is also offered by Hiap Hoe’s Signature at
Lewis which comprise two- to four-bedroom penthouses. Prices are
estimated at S$1,500 (US$1,184) per square feet, or between S$4.6
million to S$5.2 million (US$3.6 million to US$4.1 million)